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October 19, 2019Cart

Business

by Westchester County Business Journal
by WCBJ

Judge Drain rules against whistleblower in alleged health care kickback case

A federal judge in White Plains has ruled against a whistleblower lawsuit that alleges gubernatorial political pressure and kickbacks on behalf of a health care company.

The whistleblower provided insufficient details, the judge ruled in approving a motion by the health care company to dismiss the case, and failed to demonstrate independent knowledge of the alleged wrongdoing.

The health care company in question is 21st Century Oncology Holdings, a cancer treatment health care system that operates New York Radiation Therapy Management Services in Yonkers.

The governor in question is Rick Scott, who was elected by Floridians in 2010. The contract in question was issued by Broward Health, a large public health care system.

The judge is Robert D. Drain of U.S. Bankruptcy Court.

So, why is a jurist in White Plains ruling on a Florida case?

Last year, 21st Century, one of largest networks of cancer treatment centers in the world, petitioned for Chapter 11 bankruptcy protection for 60 affiliates, claiming $275 million in assets and $750 million in liabilities. Though based in Fort Myers, Florida, it chose the White Plains court for proposing a restructuring plan.

The whistleblower is David DiPietro, a former member of the Broward Health board of commissioners, the health care system that awarded the contract to 21st Century.

In 2016, DiPietro filed an action under the federal False Claims Act, alleging that 21st Century had orchestrated a scheme of illegal kickbacks to control referrals of cancer patients to Broward Health. He sought to recover payments illegally billed to Medicare and other federal health care programs.

Whisteblower cases are filed on behalf of the federal government. If successful, the accuser can collect a percentage of the money the government recovers.

DiPietro filed the whistleblower case in federal court in Florida in 2016. Then last September, he filed an adversarial proceeding in White Plains bankruptcy court, asking Drain to declare that his whistleblower claims against 21st Century may not be discharged.

The problem, Drain ruled on July 9, was a “lack of particularity.” The law requires details: what exactly happened, when and where?

What’s more, the whistleblower must provide independent knowledge of the wrongdoing. DiPietro’s allegations, Drain ruled, had already been publicly disclosed “in a publication with the wonderful name of the ‘Florida Bulldog.’”

The Bulldog had already reported that Gov. Scott was an investor in a private equity firm that owned 21st Century and that the company had received an unprecedented, long-term no-bid contract. Another article stated that the company had contributed nearly $400,000 to Scott’s re-election campaign after it got the Broward Health contract.

DiPietro claimed that Bill Rubin, a lobbyist hired by 21st Century, was a close friend of the governor and controlled appointments to the Broward Health board. He alleged that 21st Century directed Rubin to bribe and pressure health board officials to issue the contract.

But DiPietro provided no independent details or direct evidence, Drain ruled, of a bribery scheme.

Lobbyists, he said, are generally hired because of their political connections, and it would be odd to hire someone who does not have a relationship with the politician who is to be lobbied.

“The complaint would have to allege, I believe, that Rubin actually controlled Gov. Scott, as if Gov. Scott were his puppet, for example, and that the debtors (21st Century) hired him for that purpose, as opposed to Rubin’s simply being able to remind Gov. Scott that the debtors were a campaign contributor and a significant supporter, which the Florida Bulldog articles already disclose.”

DiPietro was represented by Jonathan S. Pasternak and Steven R. Schoenfeld of DelBello Donnellan Weingarten Wise & Wiederkehr LLP. 21st Century was represented by Christopher Marcus of Kirkland & Ellis LLP.